Claims experience is key for customer retention

Keeping customers after a claim requires a multi-prong approach.

By Michael A. Costonis|October 23, 2014 at 09:04 AM

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The claim is the great moment of vulnerability for property and casualty insurers. Many insurers have invested heavily in improving the claims experience, and, according to Accenture research, customers are generally satisfied with the way their claims are handled. In a global survey of nearly 8,000 auto and home insurance customers, only 14% of those who had filed a claim expressed dissatisfaction with the way their last claim was handled.

That sounds good – but the survey also indicates that of the 14% who are unhappy, fully 83% either plan to switch to a new provider or have already done so. And the claim itself is a trigger for switching, no matter how satisfied customers are with the experience. The mere fact of having filed a claim increases the customer’s likelihood of switching from 22% to 41%.

The two most important factors that influence customer satisfaction—aside from the perceived fairness of the settlement itself—are the speed and transparency of the claims process (both identified by 94% of respondents who had filed claims). These are followed by the customer’s ability to contact the insurer anytime to find out the status of the claim, and good, timely communication that keeps the customer informed (both 90%). Empathetic interactions with the insurer’s staff are also an important factor (86%), as is the ability to engage with the insurer using the preferred channels (80%).

While the claims experience plays a powerful role in influencing customers’ decisions to switch providers, other factors are also important. For example, 44% of respondents said that they would switch providers if their preferred digital channels were not available for actions such as first notice of loss, checking the status of a claim and checking on the status of repairs or replacement.

Customers are also quick to turn to social media, either to report on a good claims experience or to complain about a bad one; 29% of respondents said they had either posted or planned to post about a positive experience, while 30% said they had either posted or planned to post about a negative experience. And 44% either read or plan to read such reviews.

Anything insurers can do to increase the proportion of satisfied customers will have a direct benefit in terms of customer retention. Insurers that are also able to use their claims performance as a differentiator – establishing their reputation (especially on social media) as an insurer that is committed to settling customers’ claims quickly, fairly and transparently – will increase retention and also improve their chances of acquiring disaffected customers who are looking for a new provider.

We saw that the claim itself – whether it is handled in way that satisfies the customer or not – greatly increases the likelihood of the customer switching. It might be that the claim rouses the customer from an apathetic acceptance of the terms of his insurance policy and spurs him to compare other companies’ offerings. Or it might be that “satisfaction” implies that the customer regarded the experience as fair and efficient, but not particularly empathetic, and certainly not a pleasure.

Whatever the reasons, carriers should do whatever they can to reduce the incidence of claiming. This is likely to happen naturally as more new vehicles are equipped with systems that help drivers park their cars or automate parking altogether. Taken to its logical conclusion, drivers of autonomous vehicles such as those which Google is testing should never have to file a claim, unless they are the victims of theft or damage caused by other drivers.

Accenture has long asserted that insurers need to put the customer first, and to shape their organizations and processes – and develop their products and services – with the needs of the customer foremost. To do this, of course, insurers need to have a deep understanding of their customers, and the claim is an opportunity to capture a great deal of information which they might otherwise never have access to.

Carriers that can acquire and analyze this data will not only be able to enhance their segmentation and provide more differentiated, relevant service; they will also improve their claims prevention modelling and fraud detection capabilities. Good data will also give insurers deeper insights into why different customer segments defect, allowing them to develop specific retention strategies.

Many insurers spread service initiatives too thinly in a well-intentioned but possibly misguided attempt to delight every customer every time. Instead, they should adopt a more focused, segmented approach based on value analytics and the customer’s propensity to defect. An efficient claims operation anticipates the customer’s service needs based on data captured throughout the insurance lifecycle.

Digital technologies – based on good data – offer insurers a tremendous opportunity to transform the claims experience across all of these dimensions. By enabling them to become more customer-centric, proactive and agile, they lay a solid foundation for cost reduction, growth and an enduring competitive advantage.